Casual_Investor you are not wrong about simplified calcs. In your cashflows you have overlooked overheads, ongoing exploration costs and tax. It also looks like you have assumed that BMN will be producing 8mlbs per annum from day 1 of production which is probably an unrealistic assumption. Not to mention you have omitted to take out the 20% of the mine not owned by BMN.
You also seem to have assumed the entire mine costs will be debt funded but I am not sure you have fully factored in interest on the debt. It also appears you have understated shares currently on issue (you appear not to have factored in employee/management options). I also don't believe that BMN will be able to fully fund the capex without further capital raisings so I think you need to factor in further dilution in calculating the per share price.
In addition I don't agree with your comments about this being worst case scenario. I think operating costs will increase fairly rapidly soon after the mine comes into production. Namibia is expecting 10 U mines to come online over the next 5-6 years. That is going to have a huge impact on the labour supply/demand equation in Namibia. I think wage levels will increase at a fairly rapid pace. Have a look at what is happening in Eastern Europe at the moment to see what the impact of rapid development is having on wages when you are coming from a low base. Companies operating in countries like Romania, Slovakia, the Baltic nations, Poland are experiencing increased demands of up to 50%.
BMN Price at posting:
0.0¢ Sentiment: Sell Disclosure: Held
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